I am a commissioned salesperson. I sold and delivered a package worth $950,000 for a client. I am owed 1.5 per cent of this as my usual commission. My commission cheque does not normally come until the end of the next month after the sale. However, I’m looking at switching jobs and careers. If I give my written notice to my employer, and they walk me out before my commission hits my account, can they legally not pay me the commission owed?
The first answer
Daniel A. Lublin, partner, Whitten & Lublin, Toronto
An employer cannot avoid paying commissions that are owed by forcing an employee who resigns to leave earlier than he or she planned.
Assuming you do not provide excessive notice of resignation, if your company demands that you leave earlier than your stated end date, it is treated similar to a termination and you become entitled to compensation for what you would have earned until your resignation notice would have ended. For example, if you resign with four weeks’ notice and your company walks you out immediately, it is responsible to pay you for the salary and commissions you would have otherwise received during those four weeks.
Keep in mind that commission is not always earned as soon as you make a sale. Some commission plans require the client to pay the company first before the commission becomes earned and payable to you. In these situations, you are not entitled to the commission until it is earned. However, once earned, a commission is treated the same way as wages under employment standards legislation, which provides you with an added layer of protection.
Despite all of this, I usually advise clients that the best way to ensure they receive an important commission or bonus is to resign only once it is paid. This is the only way to be certain there will not be any problems collecting the amount.
The second answer
Rebecca Saturley, managing partner, Stewart McKelvey, Halifax
To determine whether you are entitled to this commission, you first need to find out whether the terms of your employment specify how commissions are paid following the end of your employment or when commissions are actually earned.
Courts typically enforce express terms governing the payment of commission.
Review any contract you signed when you were hired, as well as any formal commission plans and any policies. These may be challenged, but it is critical to understand what position the employer is likely to take on this issue.
If there is no express term governing when commission is paid, then courts typically find that an employee will be entitled to commission on a sale that is completed after the end of employment if the employee was the effective cause of the sale. The idea behind this is that employees should be paid for the work they do. In that sense, commissions are treated the same as salary.
In this case, all of the work associated with the sale was completed by you. Therefore, your employer must pay you the commission on the $950,000 sale because you earned that commission when you were still working for the employer.
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